For most people, the bank is the first port of call when seeking a loan. It’s what many of us have done for decades; when we need money to fund a purchase, to cover an unexpected cost or to steer through difficult times, we visit the bank manager and arrange for a personal loan. However, that mentality is slowly changing.

The Internet has been a major catalyst in the diversification of the loan industry. Consumers can now simply apply online and have a choice of lenders as well as loan types. This has stiffened up competition and helped many to get better value as well as easier access.

In days gone by you would be restricted by the lenders in your locality. This might just be a single bank or a handful. Now though there are no geographical barriers to borrowing. As long as you have a phone and Internet connection you can apply at any time and from any place. It is this environment that has really allowed the payday loan industry to boom.

Unlike your standard personal loan, a payday loan won’t take years to pay off. In fact you won’t be given the option to spread the costs over multiple months, let alone years. They have been designed to act purely as a short-term solution, bridging the gap between one payday and the next. Invariably this kind of borrowing has its positives and negatives.

The lenders take on huge risk by enabling people of almost any financial standing to borrow cash. This is reflected in the amount of interest that is applied to the loans offered. If you pay less than £25 for every £100 you borrow then you’re doing well. Worse still, calculating your interest is confused further by the application of ‘representative APR’, which actually shows what you’d pay over the course of a year and not just the few weeks that you’ll actually have the money. This is why it you are likely to encounter eye-watering rates.

However, payday loan companies are aware of this misinformation, which means that many providing straightforward loan calculations based on your individual borrowing requirements. So if interest is charged by the day and you need to borrow £120 for a week, you shouldn’t need to get an abacus out. Most will have a simple slider system or other on-site calculator that will give you a representative figure for how much you’re likely to be charged. As such comparing different lenders and carrying out your own budgeting is made extremely easy.

If you know that you’re likely to be rejected by banks and other long-term lenders, either from experience or having found that you don’t meet all of the requirements, then a payday loan can be a viable alternative. Ordinarily the borrowing requirements are pretty basic. If you’re an adult (over 18) and have a job with a reasonable salary (£750+ per month), then you’ve got a good chance of getting the loan.

Equally, you often don’t want to go through the rigmarole of a truncated bank loan application just to get £100 or so. Therefore payday loans are a more accessible and appropriate alternative in some instances, allowing you to get smaller amounts in a matter of hours, albeit with the knowledge that it will need to be repaid within a month.

This leads on nicely to the final point: speed. Payday loans are built for people who want to get their hands on cash in double quick time. So the entire process has been sliced and diced, to create a cut-down, streamlined loan. The forms are brief, the decision can be delivered within seconds and the final transfer can be completed in less than an hour. So if you’ve got your back to the wall, a payday loan can be a much better solution than a bank loan – even if it is a little more expensive.

Vincent Rogers is a finance writer who writes for a number of finance businesses. For reliable payday loans, he recommends Paydaypower.co.uk

Vincent Rogers is a finance writer who writes for a number of finance businesses. For reliable payday loans, he recommends http://Paydaypower.co.uk

Author Bio: Vincent Rogers is a finance writer who writes for a number of finance businesses. For reliable payday loans, he recommends Paydaypower.co.uk

Category: Finances
Keywords: payday loans, same day loans, loans, UK, finacne